Chapter 6, Problem 6.10BP

(a)

To determine

Gross Profit Percentage:

Gross is the financial ratio that shows the relationship between the gross profit and net sales. It represents gross profit as a percentage of net sales. Gross Profit is the difference between the net sales revenue, and the cost of goods sold. It can be calculated by using the following formula:

$\text{Gross profit percentage=}\frac{\text{Gross profit}}{\text{Net Sales}}\times 100$

To Compute: The gross profit rate for the month of February.

(b)

To determine

The estimated cost of the inventory lost in the fire of Company L, using the gross profit rate for the month of February.